For the past two-and-a-half years Raúl Cavazos has led the financial strategy that has made his Mexican company one of the brightest stars in the market.
By Nancy Ibarra
Sixty-six years after its founding, Gruma finds itself at its best moment ever, thanks to a financial strategy that enabled it to boost the value of its shares by 550 percent in just two and a half years.
Behind this program, which was implemented in December 2012, is Raúl Cavazos Morales, Corporate Director of Finance and Strategic Planning at this manufacturer of corn flour and tortillas, and to whom Latin Trade Group recently awarded the prize for 2015 CFO of the Year.
“Reflected here is all the effort that’s being made, and obviously I want to repeat that it’s a prize I am accepting on behalf of many people, all of my team in particular, but very sincerely, of the entire company, because we are all together in the achievements of the company,” he said as he received the prize.
Cavazos Morales is being modest when he speaks of the company’s achievements, but the numbers tell us more than a thousand words: the multinational’s debt-EBITDA ratio fell from 4.8 to 1.45 in just a year and a half.
One thing leads to another, and by reducing its debt and improving its economic performance, the Mexico-based company succeeded in upgrading its credit rating to BBB- with a stable outlook. “(The company) has moved from being a firm with a speculative rating to one of investment grade,” said the CFO.
How does a corn flour miller make a leap like this? Cavazos Morales shared with Latin Trade the four pillars on which he based his strategy: he reduced company expenditures, by eliminating excesses in areas like administration and marketing; he focused on the company’s core business, getting rid of businesses that were not related to corn products; he emphasized operating efficiency, cutting unprofitable products; and he reduced capital investments to focus on consolidating existing assets.
Together, these savings and efficiencies enabled Gruma to pay down a large part of its debt and become a high-performance company with a share price currently close to 232 pesos, far above the 36 pesos they cost in December 2012, when he took the reins of finance.
What’s next for this company, which has annual sales of $3.5 billion? “We are increasing our installed capacity in China, Australia and the United States, and we are considering construction of a new plant in Dallas (US) and possibly another one in the Midwest to support this zone and the northeast,” the CFO said. He added that they will invest between $200 and $250 million per year.
Gruma is very interested in its markets outside of Mexico, where 70 percent of its revenues are concentrated. It’s looking at regions like Asia and Europe to extend its reach with corn products.